Syntel Announces a Change in Segment Financial Reporting

TROY, Mich., April 14, 2014 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) company today announced a realigned financial reporting structure, which will become effective as of the quarter ending March 31, 2014.

While this financial data reflects the change in the Company's reportable segments described below, the Company has not in any way revised or restated its historical financial statements for any period.

Under the realigned structure, the Company's reportable segments are as follows: (1) Banking and Financial Services – which includes banking, transaction processing and capital markets customers; (2) Insurance – which includes insurance customers; (3) Healthcare and Life Sciences – which includes healthcare and life sciences customers; (4) Manufacturing – which includes automotive and manufacturing customers; and (5) Retail, Logistics and Telecom – which includes retail, travel and other hospitality services, logistics services, telecommunication, and all other customers.

Historical results reflecting the new business segments for previously reported fiscal periods for the 2013 and 2012 quarterly and 2013, 2012, and 2011 year-end periods are attached. The Company will begin to report results under the new reporting segments with the filing of its Quarterly Report on Form 10-Q for the quarter ending March 31, 2014.

This information is being furnished in order to provide the financial community with summary financial information and historical data for the 2013 and 2012 quarterly and 2013, 2012, and 2011 year-end periods that is on a basis consistent with the Company's new reporting segments. In accordance with ASC 280, "Segment Reporting," those prior period's segment disclosures have been restated to reflect industry segments as follows.

Syntel's leadership evaluates the Company's performance and allocates resources based on segment revenues and segment cost of revenues. Segment Gross Profit is defined as gross profit before Corporate Direct Costs.

The Company's cost of revenues consists of costs directly associated with billable professionals in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder's fees, trainee compensation and travel.

Generally, the cost of revenues for each operating segment has similar characteristics and is subject to the same factors, pressures and challenges. However, the economic environment and its effects on industries served by our operating groups may affect revenue and cost of revenues to differing degrees.

Certain expenses, for cost centers such as Centers of Excellence, Architecture Solutions Group (ASG), Research and Development (R&D), Cloud Computing, Application Management, etc., are not specifically allocated to specific segments because management believes it is not practical to allocate such costs to individual segments as they are not directly attributable to any specific segment.

Accordingly, these expenses are separately disclosed as Corporate Direct Costs and adjusted only against the Total Gross Profit.

The following table describes the historical results reflecting the new business segments for previously reported fiscal periods for the 2013 and 2012 quarterly and 2013, 2012, and 2011 year end periods.

Quarterly and YTD Revenue and Income from Operations for 2013.

Q1-2013

Q2-2013

Q3-2013

Q4-2013

YTD 2013

Net Revenues

$ in thousands

%

$ in thousands

%

$ in thousands

%

$ in thousands

%

$ in thousands

%

Banking and Financial Services

102,892

54.4%

106,038

52.4%

104,397

49.7%

109,911

49.2%

423,238

51.3%

Insurance

29,101

15.4%

30,042

14.8%

30,400

14.5%

32,546

14.6%

122,089

14.8%

Healthcare and Life Sciences

29,490

15.6%

33,654

16.6%

37,336

17.8%

38,098

17.1%

138,578

16.8%

Manufacturing

8,269

4.4%

7,731

3.8%

7,178

3.4%

7,144

3.2%

30,322

3.7%

Retail, Logistics & Telecom

19,354

10.2%

25,036

12.4%

30,560

14.6%

35,588

15.9%

110,538

13.4%

Total Net Revenues

189,106

202,501

209,871

223,287

824,765

Gross Profit

Banking and Financial Services

44,989

43.7%

45,684

43.1%

49,154

47.1%

53,075

48.3%

192,902

45.6%

Insurance

11,143

38.3%

11,614

38.7%

13,206

43.4%

13,646

41.9%

49,609

40.6%

Healthcare and Life Sciences

12,625

42.8%

14,972

44.5%

19,459

52.1%

18,772

49.3%

65,828

47.5%

Manufacturing

2,982

36.1%

2,645

34.2%

2,533

35.3%

2,684

37.6%

10,844

35.8%

Retail, Logistics & Telecom

6,860

35.4%

9,650

38.5%

14,326

46.9%

17,969

50.5%

48,805

44.2%

Segment Gross Profit

78,599

41.6%

84,565

41.8%

98,678

47.0%

106,146

47.5%

367,988

44.6%

Corporate Direct Costs

(822)

-0.4%

(984)

-0.5%

(965)

-0.5%

(1,028)

-0.5%

(3,799)

-0.5%

Total Gross Profit

77,777

41.1%

83,581

41.3%

97,713

46.6%

105,118

47.1%

364,189

44.2%

Selling, General and

administrative expenses

25,693

13.6%

18,690

9.2%

22,445

10.7%

29,759

13.3%

96,587

11.7%

Income from Operations

52,084

27.5%

64,891

32.0%

75,268

35.9%

75,359

33.7%

267,602

32.4%

Quarterly and YTD Revenue and Income from Operations for 2012 and YTD for 2011.

Q1-2012

Q2-2012

Q3-2012

Q4-2012

YTD 2012

YTD 2011

Net Revenues

$ in thousands

%

$ in thousands

%

$ in thousands

%

$ in thousands

%

$ in thousands

%

$ in thousands

%

Banking and Financial Services

93,954

55.0%

98,561

55.1%

102,630

55.1%

102,656

54.7%

397,801

55.0%

367,220

57.2%

Insurance

22,752

13.3%

25,488

14.2%

25,843

13.9%

26,993

14.4%

101,076

14.0%

82,423

12.8%

Healthcare and Life Sciences

31,209

18.3%

31,727

17.7%

32,428

17.4%

31,499

16.8%

126,863

17.5%

113,008

17.6%

Manufacturing

7,973

4.7%

7,844

4.4%

8,082

4.3%

8,324

4.4%

32,223

4.5%

24,886

3.9%

Retail, Logistics & Telecom

14,856

8.7%

15,359

8.6%

17,424

9.3%

18,301

9.7%

65,940

9.1%

54,867

8.5%

Total Net Revenues

170,744

178,979

186,407

187,773

723,903

642,404

Gross Profit

Banking and Financial Services

41,121

43.8%

42,132

42.7%

47,645

46.4%

47,431

46.2%

178,329

44.8%

144,014

39.2%

Insurance

8,742

38.4%

10,137

39.8%

10,680

41.3%

11,404

42.2%

40,963

40.5%

28,808

35.0%

Healthcare and Life Sciences

13,299

42.6%

13,396

42.2%

16,370

50.5%

15,606

49.5%

58,671

46.2%

45,398

40.2%

Manufacturing

3,106

39.0%

3,050

38.9%

3,418

42.3%

3,341

40.1%

12,915

40.1%

9,698

39.0%

Retail, Logistics & Telecom

5,997

40.4%

5,959

38.8%

7,511

43.1%

7,813

42.7%

27,280

41.4%

22,790

41.5%

Segment Gross Profit

72,265

42.3%

74,674

41.7%

85,624

45.9%

85,595

45.6%

318,158

44.0%

250,708

39.0%

Corporate Direct Costs

(813)

-0.5%

(816)

-0.5%

(805)

-0.4%

(740)

-0.4%

(3,174)

-0.4%

(3,759)

-0.6%

Total Gross Profit

71,452

41.8%

73,858

41.3%

84,819

45.5%

84,855

45.2%

314,984

43.5%

246,949

38.4%

Selling, General and

administrative expenses

26,946

15.8%

18,931

10.6%

29,036

15.6%

28,131

15.0%

103,044

14.2%

108,721

16.9%

Income from Operations

44,506

26.1%

54,927

30.7%

55,783

29.9%

56,724

30.2%

211,940

29.3%

138,228

21.5%

About Syntel

Syntel (Nasdaq:SYNT) is a leading global provider of integrated information technology and Knowledge Process Outsourcing (KPO) solutions spanning the entire lifecycle of business and information systems and processes. The Company is driven by its mission to create new opportunities for clients by harnessing the passion, talent and innovation of Syntel employees worldwide. Syntel leverages dedicated Centers of Excellence, a flexible Global Delivery Model, and a strong track record of building collaborative client partnerships to create sustainable business advantage for Global 2000 organizations. Syntel is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2008 certified. As of December 31, 2013, Syntel employed more than 23,000 people worldwide. To learn more, visit us at: www.syntelinc.com.

Safe Harbor Provision

This news release may include forward-looking statements. Forward-looking statements are necessarily subject to risk and uncertainty. Actual results could differ materially from those projected in forward-looking statements as a result of certain risk factors set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 or from other factors not currently anticipated.